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Minimum Wages Adjustments

Minimum wages will increase from the first full pay period starting on or after 1 July 2023. This journal post will cover the basics of what you need to know.

At Mal Ryan & Glen we can help you with employment-related disputes and advice.

You can also contact the Fair Work Ombudsman for free advice about whether you are being underpaid or to ensure you are paying your employees correctly.

Contact the Fair Work Ombudsman via:

Annual Wage Review decision issued

On 2 June 2023 the Fair Work Commission announced that minimum wages would be adjusted as follows:

  • the National Minimum Wage will be increased to $882.80 per week or $23.23 per hour;

  • minimum award wages will be increased by 5.75%.

What this means for businesses

For businesses, wage costs will increase, particularly if you employ people who are reliant on minimum wages.

It is important to get employee pay right. Getting it wrong can be very expensive as it can result in monetary penalties under the Fair Work Act. Advice and guidance is freely available from the Fair Work Ombudsman.

Some people don’t realise that the National Minimum Wage applies to fewer than 1% of employees. It is far more common that employees reliant on minimum wages are covered by a modern award. Approximately one in 5 of all employees have their wages set by a modern award.

The Annual Wage Review decision also “flows on” to a few categories of employees in very limited circumstances.

What this means for employees

The decision by the Fair Work Commission to award increases to minimum wages will affect about a quarter of employees in Australia.

If you are wondering whether this decision applies to you, have a look at your payslip as a first step. Employees who are reliant on minimum wages set in modern awards are paid on average $28.60 per hour.

You are also more likely award reliant if you work in one of the following industries:

  • Retail,

  • Hospitality,

  • Social, community, home care and disability services,

  • Cleaning,

  • Child care.

If in doubt, call the Fair Work Ombudsman for free advice.

The take away

While this is the largest increase to minimum wages since the Fair Work Act was enacted 14 years ago, it is still not enough to keep up with inflation which was 7% over the past year.

Critics of the decision state that such a large increase in minimum wages will increase inflationary pressure. In its decision, the Fair Work Commission pointed out they have a legislated obligation to consider the needs of the low paid and pay equity, among other statutory considerations.

At Mal Ryan & Glen, we are acutely aware of the tough times we have all endured and of the challenging times to come. We will continue to share important legal information about how to navigate these challenges.

Post script and history for those who are interested!

This Annual Wage Review Decision is interesting from a historical and technical perspective. The decision changes the relationship between the National Minimum Wage and modern award wages which has existed for about 25 years.

The curious point is that it is now possible for some employees on modern award rates to be paid less than the National Minimum Wage. This might seem strange but there is nothing in the Fair Work Act to prevent rates in modern awards from being less than the National Minimum Wage.

The National Minimum Wage has been aligned to the C14 rate which is the lowest rate in the Manufacturing and Associated Industries and Occupations Award 2020. It will now be aligned with the C13 rate which is a higher rate in the same award.

These rates are important across the modern award system. Some awards use the C14 rate and associated rates and classifications. Some other awards are very close to or are benchmarked against those rates and classifications.

The Expert Panel justified their decision on the basis that the C14 rate was only ever intended as a transitional entry level rate. The conclusion drawn in the decision was that the C14 was not an appropriate minimum safety net for employees.

This article is general in nature. It does not constitute legal advice and should not be taken as such.


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